Paragon Car Finance has found that brokers consider low interest rates to be the primary driver of used car finance growth, according to its Headlight Report.

The report found that 59% of brokers surveyed had experienced an increase in the volume of used car finance sold in the six months to December 2016, and 46% in new car finance over the same period.

Of those surveyed, 79% attributed the growth of used car finance to low interest rates, an increase from 54% in the previous survey.

The brokers ranked overall car buyer confidence as 6.9 out of a possible 10, up from 5.9 the month before, and expected finance growth to continue, despite uncertainty linked to Brexit and elections in Europe.

Almost a third, 32%, of brokers expected new car finance to continue to grow over the next six months, and 46% expected further growth in the used car market over the same period.

Fewer respondents expected higher disposable incomes and greater security of employment to be a factor that would negatively affect car finance than the month before, falling to 16% in both cases.

Julian Rance, head of Paragon Car Finance, was less optimistic than the brokers surveyed, predicting a decrease in new car finance due to the developing economic and political factors.

He said: “Looking forward to the rest of 2017 we should expect some market adjustment and a 5-10% decrease in the size of the market, driven by low sterling and ongoing political and economic uncertainty.”

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